Closure Of LLP
An LLP may elect to cease its operations through voluntary or
compulsory winding up processes. In voluntary winding up, partners
within the LLP decide unanimously to conclude its affairs. The key
requirements for voluntary winding up include:
- • Approval of 3/4th of the Partners.
- • Declaration by the partners affirming that the LLP has no outstanding debts or has the capability to settle all debts within one year from the commencement of winding up.
- • Assertion that the winding up is not intended to defraud any party.
- • Submission of an up-to-date statement of assets and liabilities.
- • Valuation of the LLP's assets.
- • Resolution detailing the rationale for voluntary winding up.
To initiate the voluntary winding up procedure, a resolution for
winding up must be passed and submitted to the Registrar within 30
days of its approval.
In compulsory winding up, the LLP is mandated by the tribunal to
wind up under specific circumstances, such as inability to
discharge debts or reduction in the number of partners below two
for more than six months.
The Ministry of Corporate Affairs (MCA) introduced LLP Form 24 in
2017 to streamline the winding up process. LLPs seeking to wind up
can apply for striking off their name using LLP Form 24.
These procedures ensure compliance with legal requirements and
facilitate the orderly cessation of business operations by LLPs
under both voluntary and compulsory scenarios.
Documents Required for Closure Of LLP
Here's a refined and legally precise version of the document
requirements for striking off an LLP:
These documents are essential for initiating the process of
striking off the LLP's name from the records, ensuring
compliance with regulatory requirements and facilitating the
orderly closure of its operations.
Procedure for Registration
Certainly! Here's a refined and professionally worded version of
the steps involved in winding up an LLP:
Step 1:
Document Review and Preparation:
A Business Expert conducts a comprehensive assessment of the LLP's
activities to identify the requisite documents for initiating the
winding-up process. This initial phase typically spans 3-4 working
days.
Step 2:
Document Drafting and Compilation: Based on the findings
and information gathered, an Expert prepares the necessary
documents for the LLP's winding up. This phase involves meticulous
drafting and compilation and generally takes 10-12 working days.
Step 3:
Submission and Processing of Winding-Up Application: The
prepared winding-up documents and application are submitted to
initiate the process. Throughout the procedure, diligent tracking
of the application ensures timely filings and compliance with all
regulatory requirements. The entire winding-up process typically
concludes within 20-25 days, subject to processing times by the
Ministry of Corporate Affairs (MCA).
Following these structured steps ensures a methodical approach to
winding up an LLP, facilitating efficient closure of its affairs
in compliance with legal procedures.
Choose Lexprosoft for Closure Of LLP
Lexprosoft provides professional and efficient services for the
closure of a Limited Liability Partnership (LLP). Whether the
closure is voluntary or due to a tribunal's compulsory winding-up
order, Lexprosoft ensures the process is smooth and compliant with
the LLP Act, 2008. From drafting and filing resolutions to
managing asset liquidation and debt settlement, their team handles
every step with precision. With tailored solutions to meet your
LLP’s unique needs, Lexprosoft ensures a seamless and hassle-free
winding-up process, helping you navigate legal and regulatory
requirements effectively.
Contact our Experts today and take the first step towards your
startup success!
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Closure of LLP FAQ's
What does the closure of an LLP mean?
Closure of an LLP refers to the process of winding up its operations and legally dissolving the entity. This signifies that the LLP ceases to exist as a business entity and is removed from the records of the Ministry of Corporate Affairs (MCA).
Why would an LLP choose to close down?
An LLP may choose to close down due to various reasons, such as prolonged inactivity, inability to meet compliance requirements, financial difficulties, or a strategic decision by the partners to discontinue operations.
Can an LLP be closed if it has outstanding debts or liabilities?
No, an LLP cannot be closed if it has unpaid debts or liabilities. All dues, including loans, taxes, and employee payments, must be settled before the closure process begins. The LLP should also ensure that there are no ongoing legal disputes.
Does an LLP require partner consent for closure?
Yes, the closure of an LLP requires the unanimous consent of all partners. The decision to close must be formally documented through a resolution passed by the partners and included in the application for closure.
What happens to the LLP’s assets during closure?
Before closure, the LLP’s assets must be liquidated or transferred to settle any outstanding liabilities. If there are remaining assets after settling debts, they are distributed among the partners as per the LLP agreement.
Is closure mandatory for an inactive LLP?
While it is not mandatory, it is advisable for inactive LLPs to file for closure rather than remain non-compliant. Failure to file annual returns and maintain compliance for inactive LLPs can result in penalties and additional legal obligations.
Can a defunct LLP be closed voluntarily?
Yes, a defunct LLP (one with no operations or minimal financial activity for at least one year) can opt for voluntary closure through the Fast Track Exit (FTE) scheme. This process is simpler and less time-consuming than the standard winding-up procedure.
How long does the LLP closure process take?
The duration of the closure process depends on factors such as the method of closure, the completeness of documentation, and the verification process by the ROC. Typically, it may take a few months to complete.
Does closure of an LLP affect the liability of its partners?
Once the LLP is officially closed, the partners are no longer liable for the LLP's obligations. However, they may still be held accountable for any fraud or non-disclosure of liabilities during the closure process.
Can an LLP be reopened after closure?
No, an LLP cannot be reopened once it is officially dissolved. To resume operations, the partners would need to incorporate a new LLP or company and register it as a fresh entity.
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